Fed Lifts Rates to 3.75-4% as 10-Year Treasury Yield Tops 5%

MacroAnalyst
โดย Zacks Investment Research·US·Read original
Summary · why it matters

The Federal Reserve raised its benchmark lending rate by 25 basis points to a range of 3.75-4% in a 12-0 vote on Sept. 16, citing sticky inflation aggravated by a spike in crude oil prices from persistent geopolitical conflicts in the Middle East. Fed Chairman Kevin Warsh said the central bank's predominant focus is on the price stability side of its mandate, adding that inflation is too high and has been for too long. Following the release of the minutes, the yield on the benchmark 10-Year U.S. Treasury Note rose above the psychological barrier of 5% to 5.016%, after hitting a 19-year high on Sept. 15, while the 2-Year U.S. Treasury Note yield rose to 4.738% and the 30-Year U.S. Treasury Note yield rose to 5.347%. Higher market interest rates widen the spread between longer-term assets and shorter-term liabilities, and higher bond yields raise the market's risk-free returns, both of which should benefit insurers that hold large long-term safe bond portfolios to back written policies. Against that backdrop, Zacks recommends three insurance stocks carrying a Zacks Rank #1 (Strong Buy) or 2 (Buy): The Travelers Companies Inc., Reinsurance Group of America Inc. and Assurant Inc.

Impact on stocks 8

Financials▲ · 2 stocks
Assurant, Inc.
AIZ
▲ PositiveMonetaryrelevance

Higher bond yields and wider long/short rate spreads benefit insurers holding large long-term safe bond portfolios, and Zacks names Assurant a Strong Buy/Buy pick.

Reinsurance Group of America
RGA
▲ PositiveMonetaryrelevance

Rising Treasury yields and wider spreads favor insurers' long-term bond portfolios, and Zacks recommends Reinsurance Group of America as a top pick.

Climate Adaptation & Water▲ · 1 stocks
The Travelers Companies Inc
TRV
▲ PositiveMonetaryrelevance

Higher market interest rates and bond yields benefit insurers' long-term safe bond holdings, and Zacks lists Travelers among its Strong Buy/Buy insurance picks.

Aging Population▲ · 1 stocks
Others▲ · 4 stocks
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